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Bowman v. Monsanto: Striking at the Roots of Innovation


Written by Joseph Allen
Allen & Associates
Posted: Feb 10, 2013 @ 10:45 am

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Two cases before the U.S. Supreme Court, Bowman v. Monsanto and Association of Molecular Pathology v. Myriad Genetics have much in common.  Both involve companies that played by the rules using the patent system to develop products providing great social benefits.  Both innovators find themselves in high stakes law suits with plaintiffs credited with representing the broad public interest whose bottom line is gaining cheaper access to important discoveries without being hampered by patents.

And both cases have ramifications for our nation beyond the interests of the targeted companies.

Bowman v. Monsanto involves a farmer who figured out how to get Monsanto’s patented seeds cheaper from a grain elevator than from the company.  I won’t attempt to delve into the intricacies of the litigation or the doctrine of patent exhaustion, but do want to consider a larger point. What happens if our innovators lose confidence in the patent system? Some apparently believe this is a desirable outcome.

Each case attracted critics of patents and technology transfer. One posted after an article on Bowman In Standing Up for Big Ag, Are Universities Undercutting Their Own Research? the following:

The idea that “strong patents” are needed is grossly untrue. Look at the internet—the whole core of it was built without strong patents. Look at Microsoft and Facebook—also built without strong patents.  About the only place where “strong patents” are needed for investment in developing university research inventions (rather than bullying or speculation) is in the biotech industry, which has its own highly problematic operating model that hasn’t changed much since Middlemarch and probably should. The huge flaw in all this is that somehow university administrators should have ownership of faculty scholarship, and that the purpose of ownership is to sell off patent rights to speculators, bullies, and trolls, as if doing so represents the high point of public service.

The rebuttal regarding the development of university research is convincingly presented in the amicus brief supporting Monsanto by several leading research universities and academic associations.



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However, the amicus brief by soybean, corn and wheat farmer associations is the best rejoinder in this particular case. And it contains a fascinating tale.

In 1836 the Patent Commissioner obtained Congressional funds for a free seed program to promote American agriculture. The program moved to the Dept. of Agriculture, eventually consuming almost one third of its budget. It ran until 1924.

The federal program, coupled with lack of patent protection, undercut incentives for industry to invest in genetic seed research.  Rather than producing the brave new world freed from the tyranny of patents envisioned by the critics, something quite different happened.  Average national yield for corn production decreased from 24.3 to 20.5 bushels per acre between 1866 and 1930.

Here’s what the grower’s brief says:

Although soybeans and other crops have been cultivated for centuries, advances in plant genetics were historically stifled by a lack of incentives to invest in new technologies and breeding techniques.

Genetic innovation in soybeans grew exponentially, like Jack’s magical beanstalk, after this Court’s 1980 decision in Diamond v. Chakrabarty… which confirmed the applicability of utility patent protection to qualifying organisms.

No other country possesses the United States’ prolific record in developing new crop varieties. Without the protection of intellectual property afforded by the U.S. legal system, seed and biotechnology companies would not have undertaken the expensive and time-consuming research necessary to improve plant technology. (pp. 5-6)

Perhaps explaining why these farmers see companies like Monsanto as partners rather than exploiters, consider these impacts after Chakrabarty:

  • Domestic soybean production increased 96%;
  •  Yields per acre are up 55%;
  • Land needed to produce a bushel of soybeans declined 35%;
  •  Soil erosion decreased 66%;
  • Water needed for irrigation is down 42%;
  • Fuel consumption decreased 42%; and
  • Greenhouse gas emissions declined 41%.  (p. 6)

This seems like the patent system worked as intended.

So what will entrepreneurial companies lacking the legal resources of Monsanto and Myriad think with these cases before the Supreme Court? If patent protection appears increasingly capricious, will they continue to invest the money and sweat needed for commercialization?

The answer’s important: intellectual property increasingly drives international economic competition.  And there are very real consequences for winning or losing.

Hernando De Soto shows in his monumental book The Mystery of Capital that the secure ownership of property, both physical and intellectual, is the essential driver of national wealth creation.

Benjamin Friedman argues in The Moral Consequences of Economic Growth that political freedom is directly tied to economic growth.  When societies feel the economic pie is expanding personal freedom and tolerance increase. When countries are economically stagnant or regressing, fears and resentments spread splitting society apart.

Adam Smith said: “It is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition… of the great body of the people seems to be the happiest and most comfortable. It is hard in the stationary, and miserable in the declining state.“ (emphasis added)

Those who so blithely undermine our patent system are playing a very dangerous game.  In the short term it may appear clever to take the benefits of inventions made by the sweat of others.  However, companies like most people are not fools.  When it appears that even when innovators play by the rules that the rug can be yanked out from under them, American prosperity is in jeopardy.  We’d better think long and hard what that portends.  It’s a bridge that once burned, is not easily rebuilt.

It is about the money– and our future.


About the Author

Joe Allen is a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications. Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. Joe has served as the Executive Director of Intellectual Property Owners, Inc., a trade association representing major R&D companies, he was involved in the creation of the Court of Appeals for the Federal Circuit, and he also served at the U.S. Department of Commerce as the Director of the Office of Technology Commercialization. From 1992 until 2004, Allen was with the National Technology Transfer Center (NTTC), becoming President in 1997. Clients included NASA, the Department of Defense, EPA, the Department of Veterans Affairs, and the Department of Commerce. Between 2004 until 2007, Allen was the Vice President and General Manager of the West Virginia High Technology Consortium Foundation. In 2008, Joe founded Allen & Associates to continue to facilitate public/private partnerships between universities, federal laboratories and industry.

23 comments
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  1. “Rather than producing the brave new world freed from the tyranny of patents envisioned by the critics, something quite different happened. Average national yield for corn production decreased from 24.3 to 20.5 bushels per acre between 1866 and 1930.”

    This isn’t necessarily because patent protections were undermined. During this time frame, increasing crop yields led to an oversaturated market that drove prices down to the point that farmers couldn’t even sell their crops for what it cost to grow them. Many farmers bankrupted themselves chasing after more product to sell to make up for the declining prices but that led to a vicious loop that kept driving down prices even further. We even started subsidizing farmers in some places to not grow at all. In that atmosphere of an over-saturated market, increasing crop yields wasn’t exactly high on the radar.

  2. I have never met or had any kind of association with Bowman. But when I read the tag line I went “Wait a minute! That would exactly be the line Monsanto would use.”

    Don’t we already know that Monsanto goes after neighboring farms to those who is paying for their seeds, claiming that their seed has blown from their clients land onto your land and now you are using our seeds. Pay up!

    I could see the argument that maybe Monsanto is not the one to drop the ax on but the laws that allows you to patent seeds, and then sue anyone who never had any thought of user their seeds be sued because an act of God, aka wind, brought the Monsanto seeds over?

    When farmers produce the food we eat, and whenever we make it harder for them, is it not obvious that everyone looses?

    Common sense has gone out to lunch.

  3. We would all like a free lunch.

    It is less expensive if we fail to pay our innovators, or our creative artists. So if we download pirated music or cheat on the corn we use, of course it costs less. If we are a commercial enterprise we can pass these savings on to our customers. Who cares what happens to creative people?

    A society, though, that embraces such morals and recognises them in law may not be successful in the long run. Politicians, though, have a 2-4 year forward window, if that. Supreme Court justices, hopefully, can look a little further ahead.

  4. Steve-

    Bowman intentionally sprayed is crops to kill those not the product of the Monsanto innovation. He then harvested the seeds of the living plants and was left only with those that infringed the Monsanto innovation. See:

    http://holmansbiotechipblog.blogspot.com/2012/10/bowman-v-monsanto-important-case-for.html

    Bowman is hardly the innocent actor you and many other are portraying him to be. He was a willing actor who knew what he was doing but thought he could get away with it.

    -Gene

  5. Joe,

    Thanks for this article. Bottom line: research and development, like money, doesn’t grow on trees. The popular media, as well as certain so-called “public interest” groups need to realize that if the investment can’t be protected (e.g., patents obtained and enforceable) to gain ROI, it won’t happen, plain and simple.

    Even the Soviets realized that altruism doesn’t work after their experiment with no patent system from around 1918 to 1924 led to no/minimal innovation; by 1924 the Soviets had patent system in place (based on Germany’s) and a completely new patent law in 1931. (I did an independent study on the Soviet experiment with socialsim and invention in college in 1974 that included using patent information that P.J. Federico was kind enough to provide me; if you’re interested in it, let me know as I’ve got a scanned copy of that independent study that I can provide you.)

  6. Dan: just wanted to note regarding your comment that the link between decreased corn production and lack of intellectual property protection is not my speculation but a summary of paragraph 2 on p. 11 of the amicus brief filed by the farmer’s associations (which is linked in the article). One signatory is the National Corn Growers Association representing 37,000 corn farmers and 300,000 affiliated growers.

  7. Excellent article and point Mr. Allen.

    These anti-patent/IP folks are in fact both hypocritical and disingenuous:

    Everyone should be able to steal from everyone else . . . er, um . . . except of course my stuff from me.

    Everyone should work for free so what I want costs me as close to free as possible . . . er, um . . . except of course what I earn from my job.

    Basically; what’s yours is mine . . . but what’s mine is mine.

  8. I do not have time to write more, but I would reject the implication that Bowman is a thief, and the apparent disregard going on as to the rule of law concerning the application of the doctrine of patent exhaustion.

    The fact that he sprayed his crops is completely immaterial. Let’s not forget that the chemical used was itself patented and had dutifully run its course of exclusion. To insinuate guilt would in essence serve to unfairly extend the life of that first patent.

  9. With all due respect, Anon, this case is not (or should not be) about patent exhaustion at all. Instead, it’s about a technology which, unlike other nonliving technologies where new copies must be created anew from scratch to cause patent infringement, self-replicates to create the “new” copy. Patent exhaustion was never intended to apply to such self-replicating technologies, and to apply it now will simply make the patent protection by Monsanto and others who choose to patent such self-replicating technologies illusory and meaningless. In fact, you’ll encourage those who develop such self-replicating technologies to engineer in sterility, i.e., make the seed unable to self-replicate. Does that scenario promote the progress of the useful arts?

  10. EG,

    With all due respect, the legal issue here IS exhaustion.

    All of the rest is money driven sideshow.

    I “get” that the technology is different. But if you want a different law to treat the technology differently, then please use the proper channels. Exhaustion was never meant to protect THAT particular business model that is being protected.

    The $ seems to be blinding the pure application of law here.

  11. I just noticed the Artemus Ward quote.

    Very droll.

  12. Thanks, President Lincoln frequently opened his Cabinet meetings by reading from “Artemus Ward” which made Sec of War Stanton furious as he had no sense of humor. From the quote, you can see why Lincoln, who did, loved reading from Ward. Lincoln said a sense of humor was the only thing allowing him to keep his wits under the pressure of guiding the US through the Civil War.

  13. Is there a disconnect between what patents can offer and what large scale (multi-national) conglomerates ‘need?’

    Two counterintuitive considerations:
    Patents are national in nature – not international. Large multi-national corporations are “above the law” in the sense that they have no stake in a national policy that would be supported by the (natural) limits of patent policy.

    Multi-nationals are already of the size and scale that provide other market power effects, and the net risk/reward of a patent system that may reward others and keep those other market powers at bay is very real.

    When one considers a bigger picture with these two factors, taking a view that large multi-nationals seek truly strong patents takes on a Pollyanna hue.

    The henhouse of innovation – something that by its very nature is disruptive and game-changing should not be entrusted nor aligned with the fox of those who have such a natural benefit to weak and or costly and inefficient patent system (read that as not promoting the use of the system).

    I have a foreboding sense of agency capture when I see who are the most vocal drivers of the patent system and I see which issues are thrust into the spotlight.

    The AIA is one of the most glaring examples of capture while mouthing all the right buzzwords (e.g. Jobs).

  14. It may be true that there was no considerable gain in average corn yields until … well … the appearance of mass farm subsidies out of the New Deal (not a ‘free market’ development), picking 1930 specifically to claim yields declined is deceitful. 1930 saw a huge decline in agricultural yields across the board due to the financial crisis resulting from the stock market crash of ’29 and banks therefore calling in loans and running farmers out of business.

    Monsanto is known for not playing by the rules but rather benefiting from numerous institutional and financial advantages and bullying folks who are not even so interested in doing business with them.

  15. Thomas-

    Whether Monsanto has bullied is irrelevant to this case. Bowman is the bad actor in this matter is without any doubt. He purposely poisoned his own crop so he could obtain the Monsanto seeds without paying for them.

    Facts and truth matter.

    -Gene

  16. Bowman is the bad actor in this matter is without any doubt

    I completely disagree.

    There is plenty of doubt as to whether the action can even be labelled “bad.”

    Further, the poison, which had itself been patented and was no longer patented, is off the table as a discussion point – unless you want to pursue a misuse of patent theory.

    Further, it is completely WRONG to say “so he could obtain the Monsanto seeds without paying for them.

    He DID pay for them. He paid for all the seed from the third party grainery. ALL OF IT.

    What he did do was kill all the seed that he paid for that was NOT of the type that Monsanto would like to illegally extend its right over through a not-yet-law extension of the exhaustion doctrine. Destruction of one’s own personal property (at least in the facts presented) is not a crime.

    Gene you are correct in your last statement: facts and truth matter. In this instance, I do not think those are in your camp.

  17. The Bowman v. Monsanto case would seem to warrant an article all to itself (can’t find one via search on IPWatchdog); as Gene usually says about software patents “the devil is in the detail” and from my reading of this case the same applies here.

    There are many who will just blindly accept the Monsanto line that the farmer is in the wrong, but doing this fails to address the fundamentals of this case; which should be causing some people sleepless nights…

    Fundamentally, a key issue is about the providence of the grain in the “commodity grain elevator” and what a farmer is entitled to do with grain obtained from such a source.

    Basically, as the court acknowledged Monsanto’s technology agreement with first generation growers explicitly states “Monsanto authorizes growers to sell second-generation seed to local grain elevators as a commodity, without requiring growers to place restrictions on grain elevators’ subsequent sales of that seed.” This would seem to be in line with the limited waiver of the first sale doctrine that prohibits first generation growers from saving and replanting seed, as clearly the grower hasn’t saved any seed from their harvest, they have purchased new seed from a third-party. Hence Monsanto has no right of control over what a purchaser of commodity grain does with that grain, including planning the grain and repeatedly spraying it with a commercially available weedkiller which had no relevant constraints upon it’s use.

    Inteterestingly, what this clause also permits is the contamination of non-GM grain with Monsanto’s grain; and contamination is something we don’t need in the food chain – as we know it leads to such outcomes as: Horsemeat being labelled as Beef, and Beef products being put into vegetarian and other foods without any one actually being aware of it.

    To me what is a shame is that the farmer didn’t take a little time and engage some scientists from their local college to over see the trial, as then his experiment could of provided some hard and uncomfortable facts about the level of contamination in commodity grain. But I suspect that this is an area that Monsanto and others probably didn’t want the covers lifting on as it raises too many awkward questions and may give grounds for appeal in many cases where Monsanto sued farmers for allegedly planting their grain without licence…

  18. This then, to me, is very damaging to Monsanto’s position:

    Monsanto’s technology agreement explicitly states “Monsanto authorizes growers to sell second-generation seed to local grain elevators as a commodity, without requiring growers to place restrictions on grain elevators’ subsequent sales of that seed.”

    Perhaps not even reaching the patent exhasution issue, a pure contract issue works against the drafter of the contract and the sale without restriction – and without notice that Monsanto retains any rights – as this is naked abandonment of those rights.

    When NORMAL use of an item, as is the case here, includes planting and making, and the patentee has fully abandoned – by their own writing – any hold on such use/make, there simply is no wrong being done downstream in commerce here.

    It is easy to distinguish the repair/reconstruction arguments as those arguments focus on items that do not – through normal use – include the make aspect. The fact that the make aspect is intergral to this item further only does damage to Monsanto’s case. They were fully aware of this fact, as it was critical to the very purpose of the invention itself.

  19. Thomas: at the risk of turning IP Watch Dog into the farm report, I feel it necessary to reply to your assertion that it was “deceitful” for the growers association to peg the decline in corn production to 1930, the year after the stock market crash, in their amicus brief to the Supreme Court.

    I checked with the folks who wrote the brief and feel the charge is unfair.

    They simply chose 1930 as an even year to end the comparison. If they had wanted to make a more dramatic comparison, they could have used an even lower number for average corn production than 1930 (it fell to 18.6 bushels per acre) in the 1920′s.

    The fact is that corn production remained relatively stagnant from 1866 until 1937 when hybrid corn was commercially introduced through private companies. According to the authors of the brief (representing farm growers associations) the increase to nearly 150 bushels per acre in 2011 is a credit to our farmers and public and private innovators helping them become increasingly productive, not government subsidies. As noted, they see the patent system as an important factor in this success.

    Finally regarding your comment on the unfairness of using 1930 for any comparison on productivity because it was a hard year on farmers. The year it was compared with, 1866, was the year after the Civil War when the agricultural South was devastated through farms destroyed, horses and mules killed, and many farmers dead or seriously wounded. The largest expenditure of the State of Mississippi in 1866 was for artificial limbs. Not exactly a banner year for much of the country.

  20. Just to clarify my abbreviated comment above. Hybrid corn was actually introduced in 1926 but it took until 1937 until it was widely adopted by farmers reflecting a jump in national production. Yields went from 18.6 bushels an acre in 1936 to 28.9 in 1937. I mistakenly attributed that lower yield number to the 1920′s in my comments above.

    The stagnation in US corn production between 1866 (when records began to be kept) until 1937 is clearly shown in this USDA chart: http://www.afdc.energy.gov/data/tab/all/data_set/10337

  21. Just finished reading the opening exchange between Walters and the Court, and cannot tell you how disappointed I am with the handling of the case from the Bowman side.

    With the legendary Waxman coming up for Monsanto, things are not looking good for Mr. Bowman.

  22. Anon-

    I just posted my summary of the case and oral argument at:

    http://www.ipwatchdog.com/2013/02/20/argument-summary-supreme-court-hears-bowman-v-monsanto/id=35787/

    Walters got beaten over and over again. I started feeling almost sorry for him. He didn’t do himself any favors by continually mischaracterizing Monsanto’s argument. Finally in rebuttal Scalia, who took him to task over and over again, finally saying that Walter’s assertions “is simply not true.”

    The difference with how the Court addressed Waxman versus Walters was as stark as any I have ever seen. It is clear that the Court views Waxman as a colleague of sorts.

    Note to all patentees heading to the Supreme Court… HIRE SETH WAXMAN! If not for yourself then for the good of the industry!

    -Gene

  23. I hope that the Justices can see that it was a poorly prepared attorney that got walked on – and not the merits of the case.